Apr
13

Key Elements to a Successful Federal Budget

By

Yet another federal budget charade is now in progress. This time for fiscal year 2013, which begins on October 1, 2012.

President Obama submitted his bloated budget to Congress in February. House Republicans issued their bloated budget in March. House Democrats then countered with their bloated budget.

Because the Republicans have a majority in the House, it was no surprise that the Republican budget passed by a vote of 228-191 and the Democratic budget failed by a vote of 163-262. It was also no surprise that not a single Democrat voted for the Republican budget and not a single Republican voted for the Democratic budget.

But because it is the Democrats that have a majority in the Senate, the Republican budget passed by the House has virtually no chance of passing in the Senate. Likewise, if the Senate were to pass a budget and send it to the House, it would be just as dead on arrival as the president’s budget was.

The Heritage Foundation, a conservative think tank in Washington D.C. always eager to do the bidding of the Republican Party, has pronounced ("First Reactions to Ryan’s Path to Prosperity Budget") House Budget Committee chairman Paul Ryan’s budget "a serious plan worthy of serious consideration" that "lays out substantive policy choices, cutting spending, reforming entitlements, and avoiding tax hikes." The House Republican budget "represents real progress toward tackling the nation’s fiscal and economic challenges." It not only "cuts spending, in the budget year of 2013 and into the future, from both discretionary accounts and entitlements," but "features strong, substantive, market-based reforms to the health entitlements and a solid, growth-oriented tax plan." Oh, the Ryan budget is not "perfect," but it "substantially advances the serious and necessary conversation about securing America’s future and its great legacy of freedom, opportunity, and self government."

Contrary to the glowing analysis of the Heritage Foundation, the Republican budget of Paul Ryan and the House Committee on the Budget, as I have recently shown, even though it is called "The Path to Prosperity: A Blueprint for American Renewal," is a bloated, unbalanced, fiscally irresponsible, mostly unconstitutional path toward, and blueprint for, the welfare/warfare state.

In their article on the Ryan budget plan, the Heritage coauthors list "six key elements to a successful federal government budget":

1. Does it cut spending sharply and quickly?

2. Does it begin decisive entitlement reform?

3. Does it avoid any tax hikes?

4. Does it ensure a strong national defense?

5. Does it contain pro-growth tax reforms?

6. Does it move swiftly and surely to a balanced budget?

The Republican budget fails miserably when it comes to cutting spending sharply and quickly. It actually proposes to increase spending by a trillion dollars over the next ten years. The Ryan plan also fails miserably when it comes to moving swiftly and surely to a balanced budget. Not only does it not foresee balancing the budget anytime in the next ten years, it plans on adding $4.5 trillion to the national debt during this period of time.

The Republican "Path to Prosperity" does include some entitlement reforms. I will let conservatives battle it out over whether they are decisive enough (they aren’t). There are two problems with these entitlement reforms. First, the Republicans propose to spend $517.1 billion on welfare (TANF, refundable EIC, SSI, unemployment, food stamps, housing and energy assistance, school lunch subsidies, etc.) in fiscal year 2013 (not including Social Security, Medicare, Medicaid, SCHIP), "only" $450 billion in fiscal year 2017, and then $511 billion in fiscal year 2022. A few billion less in proposed spending is hardly a decisive entitlement reform. And second, every president and every Congress talks about reforming entitlements and tinkers with them in their budgets. Didn’t Clinton the Democrats "end welfare as we know it"?

The Republican budget does avoid tax hikes, although not completely since it recommends clearing out the burdensome tangle of loopholes and broadening the tax base. And yes, there are some pro-growth tax reforms in the Ryan plan. Thank God the Republicans only want to take 25 percent of the income of successful Americans and American businesses instead of a higher percentage.

Ensuring a strong national defense is about the only thing that the House Republican budget plan does well – if all you look at is the level of defense spending. But is this a good thing? The United States spends about as much on defense as the rest of the world combined. This is because most U.S. defense spending is spent on offense not defense. It is spent on empire, imperialism, occupations, senseless foreign wars, and interventions in other countries. When the Heritage Foundation talks about a budget ensuring a strong national defense, it refers to the defense budget being a gravy train for defense contractors.

But not only is the Republican budget a failure, the Heritage Foundation’s budget elements are faulty as well. From a libertarian, constitutional, limited government perspective, here are six key elements to a successful federal budget:

1. Does it propose only spending authorized by the Constitution?

2. Does it begin to permanently end entitlements instead of just reforming them?

3. Does it cut taxes instead of just avoiding tax hikes?

4. Does it provide millions for defense but not one cent for empire?

5. Does it eliminate taxes instead of just instituting tax reform?

6. Does it balance the budget now, not in five or ten years?

Republican presidential candidate Ron Paul’s plan to cut the budget by a trillion dollars the first year and balance it in the second is the only thing that comes close to being a successful federal budget. All the Republican talk about cutting the budget is, as usual, just a bunch of hot air.

Originally published on LewRockwell.com on April 12, 2012.

Categories : Articles
  • Alex

    Great article! Love the site.

  • David Niles Jr

    Great article. Paul Ryan’s budget would balance the budget in 40 years. Ron Paul wants to cut  $1 trillion dollars in 1 year.  Why the GOP  won’t endorse RP is beyond me

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